A financial premium for remote hospitals, consultant contract changes and ending the practice of separating out services like ambulatory care are among the recommendations from a major study on the sustainability of smaller hospitals.

The report said it was designed to “dissuade the thought that the reconfiguration of services is the only solution to staffing and other challenges posed by running smaller hospitals”.

However, it argued their sustainability depends on significant national policy reform and local practical process changes and painted a chaotic picture of the NHS’s acute medical provision.

Many hospitals it studied were using “highly complex, fragmented models [often with] unhelpful divisions” between acute medical and other services, particularly the emergency department and critical care, it said. These systemic problems were then compounded by longstanding recruitment and retention problems and a heavy reliance on locums.

NHS leaders should examine whether there should be a “financial premium” for small scale or remote sites to cover costs of suboptimal economic scaling, additional travel and to attract staff.

Reform payment models for consultants on smaller sites: for example, appropriately remunerating consultants for returning to hospital overnight, rather than paying a flat rate for an overnight call regardless of whether they were required to return or not.

Remove so called “carving out” of services: smaller organisations do not have enough staff to run several independent units (the ED, the AMU, the frailty unit and ambulatory emergency care), but they can still provide ambulatory care processes from within the ED and/or the AMU.

Making front door processes slicker: it reinforces system leaders’ call for smaller hospitals to optimise flow by restructuring existing pathways. “To make the best use of limited staffing resources… where possible patients should remain in the initial assessment area until a diagnosis has been established or the patient is clinically stable enough for transfer,” it says.

On additional financial incentives the review says: “All of the international examples we have examined recognised that providing care in rural and remote locations imposes costs on ambulance services and hospitals, reflecting both suboptimal scale and the cost of travel.”

“[The NHS needs] to decide what the appropriate premium for supporting these services should be. Given the heavy use of locum staff and the high costs of centralisation, the choice may not be whether a premium should be paid, but how it is going to be paid.”

Nuffield Trust chief executive Nigel Edwards told HSJ: “The main purpose of a premium is to support smaller trusts with the fact they operate at suboptimal scale and also the cost of travel.”

On using it to attract staff, he added: “This does not necessarily mean simply paying more money, although this is an option. It’s more about creating better amenities, for junior doctors in particular, opportunities for learning and development, and secondments to tertiary centres, to make the trusts more attractive places to work.”

The review follows health secretary Matt Hancock, who is MP for rural West Suffolk, using his conference speech to back small trusts.